Brokerage firm NH Investment has been under pressure to offer compensation as it promoted 470 billion won (US$417 million) of the fund managed by Optimus Asset Management, which is accused of wrongdoing and froze withdrawals due to liquidity problems.
The scandal surrounding Optimus Asset Management centers on allegations that the private equity company solicited funds worth a total of some 1.2 trillion won from thousands of people for investments in public institutions but actually funneled most of the money into risky assets, causing huge losses to the investors.
The panel of the Financial Supervisory Service (FSS) said it has advised NH Investment to return the principal to investors in two contracts promoting the fund because the brokerage failed to properly explain about the risks of the fund to investors.
If NH Investment accepts the panel's advice, about 300 billion won worth of the principal will be eventually returned to investors, the FSS said in a statement.
Optimus executives and officials from local financial firms have been arrested on charges of fraud in the prosecution's widening probe into the scandal. (Yonhap)